Shifting politics in many South American countries are creating problems for residents and difficult working conditions for oil companies. Representing 10% of the world's oil reserves and 4.3% of gas reserves, the region seems prime for development, given the growing instability of the Middle East. However, left-leaning policies spearheaded by new political leaders are having adverse affects on long-term investment. "Nationalist fervor sweeping South America can temper investments," KPMG partner Jose Aldrich said at the KPMG Global Energy conference in Houston recently. With Venezuelan president Hugo Chavez raising taxes on oil production to 50% and forcing foreign countries to join joint ventures with the national oil company, Aldrich warned that the country could end up alienating foreign investors and in turn ruin its own economy. For more on this, see the August issue of Oil and Gas Investor. For a subscription, call 713-260-6441.

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